Artificial intelligence (AI) is projected to revolutionize the global banking industry, with the potential to increase profits by USD 170 billion by 2028. AI’s influence extends to combating financial fraud, enhancing security, and reshaping traditional banking activities. Early adopters of AI regulation include the European Union and China, while the US and India show varying approaches. The economic impact of AI is expected to significantly enhance developer productivity and streamline banking operations.
Artificial intelligence (AI) is set to significantly impact the global banking sector, potentially increasing profits by USD 170 billion or 9 per cent by 2028, according to a report by CITI. Described as a General-Purpose Technology (GPT) of the 2020s-2030s, AI’s influence is expected to reshape banking activities, enhance security, and change the intellectual property landscape.
A key highlighted benefit is AI’s capability to combat financial fraud, particularly real-time payment scams such as Authorized Push Payment (APP) fraud. In the UK, APP fraud comprises 40 per cent of banking fraud losses, with potential costs estimated to reach USD 5.25 billion across the US, UK, and India by 2026 if not addressed.
Early adopters of AI regulation in finance include the European Union, China, and Singapore. In contrast, the United States has been cautious, with India showing fluctuating stances—initially non-regulatory in early 2023, but considering comprehensive AI laws by mid-2024.
The economic impact of AI could boost developer productivity by 10-50 per cent, translating to annual savings between USD 2 to USD 16 billion in the US banking sector. This gain is driven by AI-enhanced software optimizing tasks traditionally managed by technology staff.
Overall, AI is likened to revolutionary technologies like the steam engine and the internet, with the potential to commoditize human intelligence and disrupt existing industries. Adapting to AI advancements and regulatory environments is essential for financial institutions to fully harness its potential while mitigating risks.
